The IP MANIFESTO – GIVE US YOUR VOTE

What we believe – Without placing value on knowledge assets, there is no way to build a knowledge based economy.

What we want – A successful strategy for growth recognising the fundamental importance of intangible assets.

What we need – Policies framed in a way that actively encourages and rewards investment in the ‘fruits of innovation.’

What we advocate:

1. Leverage IP investment: recognise value in intangible assets

Historically, banks have ignored intangible assets on company balance sheets. In response to the 2013 Banking on IP? report, Business Secretary Vince Cable rightly said that

“intellectual property is too important an asset to be undervalued by banks, as the main source of finance”.

Lenders must be encouraged to stop drawing a red line through investments in knowledge, especially when compelling evidence is emerging that companies with IP and intangibles grow faster, and are safer bets, than those without them.

2. Enable core IP to be used as collateral for lending

Current capital adequacy rules aimed at ensuring banks are robust have an unintended consequence. They drive banks to prioritise assets like property that are supposedly well-understood; but as well as well as being at the root of the last global recession, these are assets knowledge-based businesses don’t really need or use.

Steps must be taken to break this vicious circle. Banks need support from regulators to find acceptable ways to associate collateral value with ‘good’ IP. Only then will banks be able to fulfill their mission of lending more while staying safe.

3. Help new ideas take off: raise EIS tax relief to 40%

Disruptive new ideas often require seed funding to get them on the road to growth, beyond the financial support friends and families can provide. By definition, this sort of investment carries very high risk, so to provide an incentive, the Enterprise Investment Scheme (EIS) allows private investors to claim income tax relief of 30% on the cost of new shares.

The last government increased the rate of relief from 20% to 30% in 2011, but most ‘angels’ pay higher rate income tax. To boost investment, we think the next Government should go further and make EIS relief equivalent to the higher rate, namely 40%.

4. Get IP into the secondary curriculum

In too many contexts, including education, IP is seen as a specialist legal topic. For the UK to be a competitive global force in knowledge, this is not good enough. We should all have at least a basic grounding in what IP is and why it matters, and this will be most effective if it starts in our schools, when consumption of copyright material really begins.

As a starting point, IP must be referenced in all ‘A’ level qualifications that have anything to do with business & economics, design & technology and the media. We’d ultimately like to see a more pervasive approach that helps students gain an informed view on how it influences lives and livelihoods.

5. Encourage derivative works, not rip-offs

For our creative and digital industries to remain globally competitive, continuous innovation is vital. We must preserve incentives to innovate by ensuring that a reasonable degree of control can be exercised over content.

As set out in our recent report for the IPO, Penalty Fair?, more substantial penalties for criminal acts of online piracy are needed. However, these should be balanced with practical measures to open up legal content access so that others can innovate. The Copyright Hub should be better resourced so it can go further and faster.

6. Keep properly targeted tax breaks for IP

Not long after it was announced with a fanfare, it seems clear that Patent Box will not continue to operate as now for much longer. Whilst we understand the need to address ‘profit-shifting’, we think the focus on IP is justified and that it needs to continue.

Politicians need to understand and defend the fact that ground-breaking IP can and should create benefits that are not simply proportionate to its cost, and not be backed into absorbing it within a modified R&D Tax Credit regime that only takes expenditure into account.

7. Insist on better IP record-keeping

One of the barriers to IP trading, and the use of IP as security for lending, is that formal records of ownership are not always reliable.

While supporting the voluntary initiatives now under way to improve it, we believe there is a strong case for requiring companies to keep official IP registers properly up to date.

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One thought on “The IP MANIFESTO – GIVE US YOUR VOTE”

Good to see positive action being taken. Creative Barcode will be publishing a report later this month which would uphold a couple of these points – particularly better IP identification and record keeping and consumer education issues. I’ll share a copy with you. Raising the SEIS and EIS relief to 40% is logical.